How Much Net Profit Should I Aim to Achieve?

Picture this: You’re steering the wheel of your business, and the road ahead is profitability. How much net profit as a percentage are you aiming to generate this year? It’s a question that holds the key to your business’s financial health and your personal success as a business owner.

Net Profit Margin.

Before we dive deeper, let’s clarify what net profit means in this context. Net profit is the pre-tax profit – the amount you take home after paying yourself a market-based salary for your role within the company. If you’re not certain what that number should be, we’ll shed light on a figure of what that number could be and most likely needs to be. After all, understanding this number is what separates the business owners who navigate on track from those who may find themselves veering off track.

You might be thinking, “Well, as long as I’m drawing a salary and there’s a little extra left, I’m content.” And that’s a valid perspective. However, consider this: What if we set your sights on a 15% net profit? Imagine bringing in $1 million in sales from the projects you’ve successfully undertaken. In this scenario, setting 15% as your target means aiming for $150,000 as pre-tax profit – a number that reflects your income after paying yourself a market-based salary.

Future-proofing Your Business.

You might be wondering the reason behind 15% figure. As your business grows and expands, new employees come on board. But here’s the kicker – with each new hire, your profit margin experiences a dip. If your initial profit margin is below 10%, adding an employee can instantly drag your profit margin down. It may add somewhere in between 60 to 100 thousand dollars to your bottom line as an overhead or added cost, which means your profit margin could drop to as low as zero. How do you recoup that loss and convert it into a return? If you know this as a possibility, you can give yourself a few months for the new employee to bring in the profits. That is where tracking your net profit margin becomes crucial.

By targeting 15%, you are future-proofing your business against these potential dips. By operating at 10% margin, when you hire a new team member, be it for administration, customer support, estimating, or business development, your profit margin on a month-to-month bases will drop back to a single digit percentage. However, if you’re operating at 15%, that dip may only bring you down to 10%, ensuring you remain profitable during this transition. Regardless of what part of industry you are in or what trade you are involved with, 15%+ net profit margin is very feasible.

Strategic Implementation.

It is simple; however, simplicity doesn’t always equate to ease. Achieving a 15% net profit requires strategic planning and diligent execution. It takes time. It may take 3 to 12 months. But at the end of that journey, you will enjoy a market-based salary for yourself and a 15% consistent pre-tax profit for your business. At PROTRADE United, we craft strategic implementation that works for you, deliver you financial returns and ensuring that your business is profitable to succeed and not just succeeding to be profitable. It’s about thriving while maintaining profitability.

So, as you map out the course for your business’s financial journey, make sure 15% is etched as your destination. This benchmark not only ensures your success but also bolsters your business’s longevity and adaptability. If you’re ready to set sail toward that 15% net profit horizon and would love some support along the, please be in touch. We would love to support you.

Would you like to gain greater clarity and consistency in your trades business?

Let’s hit the ground running with a PERSONALISED BUSINESS PERFORMANCE SESSION

Diagnostic Tool
Use a powerful diagnostic business tool, to understand the current reality
Identify the Obstacles
Uncover the obstacles that may be holding you back from more profits, time and freedom
Action Plan
Craft a realistic action plan to produce results in the next 6-12 months
Recommendations
Gain recommendations specifically designed for a trades and construction businesses operating in Australia & New Zealand.

HOW PROTRADE UNITED HELPS
BUSINESSES LIKE YOURS

WHAT ARE OUR CLIENTS SAYING?

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Salmon Plumbing
John Salmon

"The fact that I know my business is running smoothly and it doesn't need me at every particular juncture means that I can take some time off for myself"

What you’ll get in the complimentary 60 min session

Diagnostic Tool

Use a powerful diagnostic business tool, to understand the current reality

Identify the Obstacles

Uncover the obstacles that may be holding you back from more profits, time and freedom

Action Plan

Craft a realistic action plan to produce results in the next 6-12 months

Recommendations

Gain recommendations specifically designed for trades and construction businesses operating in Australia & New Zealand

Let’s Hit the Ground Running with a Business Performance Session

Would you like to gain greater clarity and consistency in your trades business? Book a complimentary ‘Business Performance Session´ with a trades business specialist and uncover what may be holding your business back.